What You Need to Know: The Nine Essential Fund Facts
Step 1: What Are the Goals and Strategies of the Fund?
The mutual fund prospectus is essential reading for any prospective investor. However, this document is often written by the fund's legal department—with disclosure requirements in mind rather than the provision of understandable investment information. When you are comparing several funds, how can you hone in on the salient features of each?
Some funds employ the fund profile to introduce their funds. The profile is a slim sketch of a mutual fund's critical character points. The format of the profile is a standard nine points in a specific sequence, and the discussion is lean. The same information will appear for each mutual fund in a family, in the same place and in the same form.
What Are the Goals and Strategies of the Fund?
How Do I Judge the Risks of the Fund?
What Fees and Expenses Can I Expect?
Who Manages the Fund?
How Will Holding the Fund Affect My Taxes?
What Services Does the Fund Offer?
A step-by-step walk-through of the nine points will give you an idea of what the profile can tell you. The nine points can also be used as a guide if you are looking at a fund's prospectus or information at a fund's Web site. To illustrate the nine points, parts of various funds' profiles appear in italics under each point, followed by comments on what to look for and what to expect.
Point 1: Investment Objectives/Goals
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